Jacobs v. CNG Transmission Corp.

The Jacobses (plaintiffs) acquired a lessor's interest in an oil-and-gas lease whose granting clause covered both production and gas storage, and whose habendum clause kept the lease alive as long as CNG (defendant) engaged in either production, pooling, or storage on the property. CNG never drilled or pooled on the land but did store gas there. The lease said nothing express about whether the production, pooling, and storage obligations were severable. The plaintiffs sued to cancel the lease, arguing those provisions were severable and that CNG's storage-only use did not satisfy its production obligations; CNG argued the lease was indivisible, and both sides cross-moved for summary judgment.